Top iron ore exporter sees price dipping below $50 a tonne by 2019

Mining News - Iron ore will sink back below $50 a tonne by 2019 as global supply continues to increase, steel inventories swell and Chinese demand dwindles, according to Australia, the world’s top exporter, which released its revised outlook just a day after the country’s largest port reported a jump in shipments for August.

Forecast comes only a day after the country’s largest port reported a jump in iron ore shipments for August. The steelmaking raw material will average $50 a tonne next year and drop to $49 a tonne in 2019, Australia’s Department of Industry, Innovation and Science forecast in its quarterly report released Friday.

“Growing low-cost supply from Australia and Brazil and moderating demand from China, are expected to weigh on the iron ore price,” it says.

“There are several uncertainties impacting the outlook for the iron ore price. The first is the pace and magnitude of the decline in China’s steel production, which in turn largely depends on government policy.

“Second, companies have benefited from the recent price rally, and thus may be able to continue to produce at cash losses for a longer period of time. The resultant oversupply may bring on exaggerated price weakness.”